Horizontal Marketing vs. Vertical Marketing

Horizontal Marketing is another term for the type of business structure that everyone is most familiar with. Examples of this are large corporations, chain stores, real estate agencies, mortgage brokers, insurance, and most multilevel marketing (mlm) companies, etc. These types of organizations market and expand their products and services through multiple points of distribution or sales divisions, sales people etc. Their organizational structure looks something like this

In this type of structure, there is an owner, or ceo that has some divisional managers, vice presidents, etc. who are basically in competition with each other. Those vice presidents oversee some director level managment or the equivalent depending on the size of the organization. Those directors are in competition with each other. Then you have some middle managers which oversee their individual sales teams. Each of these teams are in competition with each other and each sales rep is in competition with each other.

By the way, this is the same structure for our US government, churches, sports teams and so on. It is a structure that definitely works but that doesn’t mean that there can’t be a better, more innovative structure. People may even call this structure a “pyramid” because it looks like a pyramid shape when drawn out.

Now let’s compare horizontal marketing to something called vertical marketing. What is Vertical Marketing?

Vertical Marketing is basically taking the horizontal structure and creating less competition and therefore more cooperation between each of the participants. What if we took each of those management teams and connected them all up together so there was an economic incentive to work with each other? I’m more visual so lets take a look at it:

Here instead of multiple teams spread out horizontally, we have just 2 teams that are lined up vertically. Okay, you may be thinking, “So What?”

Let me ask you a question….What if at your job, you received payment for everything your boss produced? Would you like your job more? That probably depends on the boss, haha. What if each of the managers actually worked together because they were each paid EQUALLY off of each other’s efforts? What if there were equal partnerships established instead of the usual inequalities of traditional business?

Some of you may be thinking, well if I work harder then the next guy, why should he be rewarded equally? My answer to that is “you are absolutely correct.” In this type of vertical structure, it is up to the individual to build the two best teams of producers including their own effort and based on that effort, their compensation will follow accordingly. The great thing about vertical marketing is that there is way more incentive for people to help each other because their are way more financial linkeages.

In other words, in a vertical structure, there is less competition and more synergy because you will be receiving 100% credit for the sales of everyone in that vertical line and each of those people in that vertical line are receiving each other person’s sales volume.

This is a very powerful structure and one that I have found to change the organizational behavior to a point where it is no longer dog eat dog.